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ANSWER ONLY QUESTION 28 AND EVERYTHING IN BOLD. 26) Hi Def Video Co makes two types...



ANSWER ONLY QUESTION 28 AND EVERYTHING IN BOLD.

26) Hi Def Video Co makes two types of digital DVD players, economy and deluxe, with the following per unit cost information:
$ECONOMY $DELUXE
DIRECT MATERIALS $50 $100
DIRECT LABOR $25 $25
MANUFACTURING OVERHEAD ? ?
TOTAL MANUFACTURING OVERHEAD ? ?
UNITS PRODUCED $8000 $2000

The company currently applies $1,000,000 in manufacturing overhead to these two products on the basis of direct labor hours. Both products require two hours of direct labor to make one. If the applied overhead rate is $50 per direct labor hour, what is the final manufacturing cost per unit of the Deluxe model?

A. 50
B. 175
C. 100
D 225

27) Using the information from question 26), if Hi Def wanted to implement ABC costing and had the following infomration gathered to determine the cost:

COST POOL ACTIVITY COST COST DRIVER ECONOMY MODEL DELUXE MODEL
MATERIAL HANDLING 250,000 NO. OF PARTS 40,000 60,000
QUALITY CONTROL 500,000 NO. OF INSPECTIONS 8,000 12,000
FINISHING 200,000 DIRECT LABOR HOUR 16,000 4,000
PACKAGING 50,000 NO. OF SHIPPED PACKETS 2,000 2,000

WHAT IS THE ACTIVITY RATE PER SHIPMENT FOR THE PACKAGING ACTIVITY COST POOL?
A. $4.00
B. $12.50
C. $8.00
D. $2.50

28) USING THE INFORMATION FROM QUESTIONS 26 AND 27, USING THE ACTIVITY METHOD, HOW MUCH OF THE FINISHING COST WOULD BE ASSIGNED TO THE ECONOMY MODEL?
A. 80% OF $200,000 = $160,000
B. 80% OF $50,000 = $40,000
C. 20% OF $200,000 = $40,000
D. 20% OF $50,000 = $10,000

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Answer #1

Answer is: A. 80% OF $200,000 = $160,000

working
overhead cost is based on number of direct labour hours.
The labour hours on economy model are 16000
The labour hours on delux model are 4000
Total labour hours on both model are 20000
total finishing cost is US $ 200000
finishing cost per labour hour is 200000/20000 10
finishing cost for economy model is 10*16000 160000
percentage of finishing cost for economy model is 160000/200000 80
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